Magazine article International Productivity Monitor

To Capture Production or Wellbeing? A Review Article on towards Measuring the Volume Output of Education and Health Services: A Handbook

Magazine article International Productivity Monitor

To Capture Production or Wellbeing? A Review Article on towards Measuring the Volume Output of Education and Health Services: A Handbook

Article excerpt

National accounts have become a central source for evaluating living standards. Headline numbers of GDP are compared, policy makers worry about trends, and researchers delve into details. However, a rather large deficiency exists in national accounts coverage of industries that are becoming increasingly important in advanced economies: health and education services. It is this gap that Paul schreyer, Deputy chief statistician at the OECD, seeks to fill in Towards Measuring the Volume Output of Education and Health Services: A Handbook (Schreyer, 2010). (2)

Researchers have expressed concern regarding indicators of output volumes of many service sectors in the national accounts. But this shortcoming is particularly severe for education and health services, which are largely provided by government, since there are limited market output values or prices. Even if some share of output is provided by the private sector, the partial coverage by insurance or significant government involvement in price setting will mean that prices are not meaningful indicators of consumer choice or marginal valuation. As The Economist (2012) noted, "Americans spent $2.6 trillion on healthcare in 2010 ... yet few of them have the faintest idea what any treatment costs or how it compares with any other treatment." Although prices for attending private-sector firms are available, one might be leery of applying these prices to their public-sector equivalents.

As a result of these problems, the national accounts traditionally incorporate these services at input cost: the value of output of education is equal to the value of all the inputs used in its production. In turn, this output=input treatment implies that the national accounts have nothing interesting to say about their productivity: it is always unitary and its growth is zero. This treatment can distort the national accounts, as the measure of aggregate real output of education and health services is not particularly meaningful. Given that many of these services are provided by government, this treatment may even contribute to popular depiction of government as a consumer of resources rather than a producer of services! Indeed, I was surprised to learn in reading the Handbook that during the formative years of national accounting, some did not feel that government services contributed to GDP. (3)

Over recent years, statistical agencies have started to move to rectify this situation by developing more sophisticated measures of government output. Professor Anthony Atkinson reviewed many new practices and offered further guidance at the behest of the office of National Statistics (ONS) in the United Kingdom (Atkinson, 2005). (4) Paul Schreyer's task in this Handbook is the more daunting prospect of going from the ideal approach to the practical, and delivering concrete suggestions for output measures covering health and education services for inclusion in the national accounts, and this on a comparable international basis.

The Handbook is the latest instalment of the OECD's efforts to bring some degree of coordination and comparability in data design and statistical methodologies between member states for education and health services. (5) Of course, in addition to basing recommendations on statistical or economic theory, the advice of the OECD on suitable output measures will be taken bearing in mind whether international data will be available. Although trends over time in output for one country are informative by themselves, there is scope for significant insight if international comparisons of both levels and growth could be made.

There are several practical challenges in moving to output measures for health and education services that are independent of input measures. First is the obvious challenge of developing or obtaining data on output. A second difficulty is incorporating the impact of quality change. Finally, the appropriate weighing for aggregating different types of education and health services is unclear. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.